Category Archives: Google

News and thoughts on Google.

How Facebook Will Become The Biggest Ad Network

Facebook’s stock has been taking a beating since their IPO. I’m not an expert on stock trading and I don’t own any Facebook stock, but I think the media and investing world are thinking too much about the short term and what Facebook is today opposed to what it likely is to become in the future.

Primary Revenue Concerns

One of the primary concerns is how Facebook will monetize it’s growing mobile audience. Everyone seems to be really freaked out about the fact that mobile is growing and Facebook hasn’t monetized it well yet. On one hand, people have a point even though Facebook made $180M in revenue from mobile sponsored stories on their first try. On the other hand, isn’t it a pretty good situation that Facebook is the most downloaded application on EVERY mobile platform and is far and away the leader in mobile time spent? That’s a pretty good starting place to figure out how to be a dominant player in mobile.

Another big question on everyone’s mind is if Facebook will be able to build any significant businesses beyond advertising. Since their payments revenue has been primarily gaming-related and that growth has slowed, people are wondering where the growth comes from. Payments could be a solution in areas beyond gaming, and some people are also pointing to their acquisition of Karma as a way to get into mobile/social commerce. Techcrunch also has a run down of revenue-generating ideas, but I wanted to go deeper in an area that I think people are underestimating: A Facebook Ad Network.

The Birth of an Ad Network

The concept of a Facebook Ad Network is not a new one. People have been bringing up that idea since they launched their developer platform in 2008, and they’ve even recently started testing running ads purchased through Facebook’s ad interface on Zynga.com.

Running socially-powered rectangle ads on the right rail of Zynga.com is just scratching the surface, and is only part of what Facebook could do as an ad network.

First, Facebook can offer what they are doing on Zynga.com to every other web publisher easily since almost every quality publisher uses Facebook’s platform already for authentication. Since that user data is already there, Facebook can do the same targeting they do on Facebook itself.

Why would publishers take their ads you ask? They are visually more pleasing than Google’s Adsense text ads, since they are not standard IAB shapes they probably get better click-through rates, and as social ad targeting continues to improve it’s possible that the CPM they can earn would be higher than other alternatives.

Taking it to Mobile

Even though launching the full web ad network of Facebook’s standard ads would be huge by itself, Facebook also has the majority of quality mobile applications using Facebook for authentication as well. Additionally, Facebook’s new mobile sponsored stories ad unit is showing great results so far in Facebook’s mobile app.

Since most quality mobile apps contain some kind of newsfeed similar to Facebook’s, Facebook could extend their mobile sponsored stories to the feeds of other mobile applications. They also have a new non-social ad unit that allows for “appvertising” where other application developers can offer their app for download. It makes perfect sense for Facebook to extend this to the other mobile applications using Facebook’s authentication.

Mobile is exploding, and as it continues to grow Facebook can easily become the largest mobile ad network very quickly.

Bigger Than Adsense?

Facebook is still a young company. They’ve also only been serious about monetization for a couple of years. Many people have pointed to the fact that Google at the same age was ahead of Facebook in these efforts. That’s fine, and it really doesn’t have any impact on how big Facebook’s ad network can become. Google needed to acquire Applied Semantics to create Adsense, and it’s possible that Facebook could make an acquisition that also jumpstart their ad network efforts in powerful ways.

Even if they don’t acquire anyone and do it on their own, the combination of Facebook’s massive web ad network potential with the possibility of a huge mobile ad network even without a ton of innovation leads me to believe they could challenge Adsense for the largest ad network.

The one thing they have working against them is that Adsense really benefits from having advertisers who are really primarily interested in advertising on Google search results also extending their ads into the Adsense network. Is advertising on Facebook’s owned and operated site itself going to bring in the same type of demand?

Probably not. However, Adsense is not a very effective form of advertising on mobile devices. If Facebook is the one to crack mobile feed advertising and bring other innovations to advertising on mobile, they’ve got a shot at overtaking Google’s network.

What’s your take? Can Facebook become the biggest ad network on the web and mobile?

Why Is Google Even Involved In The Yahoo! Acquisition Talks?

'YAHOO in 2001.' photo (c) 2007, gaku. - license: http://creativecommons.org/licenses/by/2.0/

There’s been numerous news reports about Google considering “buying” Yahoo!, or at least teaming up with private equity companies to do so.

While most of the articles at least mention in passing that it’d be unlikely for this to pass government review, I haven’t seen many people actually discuss why Google is involved.

Why wouldn’t a Google acquisition of Yahoo! pass government review? Well, if the Department of Justice wouldn’t pass the search deal that Google and Yahoo! worked up in 2008 where SOME of Yahoo!’s search results were powered by Google, then why would they actually let Google take part in buying all of Yahoo!?

In fact, many thought that Google knew in 2008 it wouldn’t pass government review, but tried to do the deal just so Yahoo! would turn down Microsoft and waste a lot of Yahoo!’s internal time (and it worked). I sat in many meetings at Yahoo! that were spent talking about the tests we were running with Google and how we were going to implement the deal.

There hasn’t been enough change in search market share for anyone to seriously even think it could pass. I’m not entirely sure if Google being only part of an ownership group with private equity firms would change the government’s view, but I doubt it.

Which leaves us asking, why is anyone even taking Google’s interest seriously?

I can’t answer why anyone is taking Google seriously, besides the fact that they are one of the only players who actually have the cash to do something around Yahoo!.

'Red flags' photo (c) 2004, Rutger van Waveren - license: http://creativecommons.org/licenses/by-sa/2.0/It just seems like any major involvement on there part is going to just raise big red flags with the governments of the world and will never pass “go”.

Why would Google get involved then?

I feel like there are two obvious answers to this one.

  1. Google can pretend to at least have interest in Yahoo! to draw out how quickly something happens here. The more time Yahoo! is in limbo, and the more time Microsoft spends figuring out what to do about it, the better that is for Google to continue to separate itself from them.
  2. Google can go as far as even floating prices out there to try and get others (Microsoft) to feel like they have to pay more in order to get Yahoo!. The more money someone spends on Yahoo!, the better that is for Google.

I suppose it is possible that Google really does want to keep Yahoo! out of Microsoft’s hands, but it seems like Microsoft having to acquire and digest Yahoo! would just allow Google to accelerate ahead even further ahead. It’s all just a ruse to waste time by complicating matters and drive up the price. Well played Google.

Google Plus Rapid Growth: Will It Last?

Google Plus growth screenshotThe above graph was created by Leon Haland and featured on Techcrunch Europe.

The tech media has been all over the rapid growth of Google’s social network Google Plus. Many have assumed that this rapid rise means that Google Plus is on it’s way to be a serious competitor Facebook and Twitter.

After my usage of Google Plus so far both sharing and reading, it’s definitely a solid product that does some things better and some things worse than other social tools.

However, I’ve yet to feel like it’s on it’s way to truly competing with Facebook or Twitter.

I think the graph above has been caused by the following:

  • Familiarity with Social Networking - A larger number of people are now familiar with social networking than when Facebook and Twitter launched. They also have more friends and are more connected making it easier to hear about a new social network and decide to go try it out.
  • A Desire For An Alternative - While Facebook and Twitter are massively used, there are a large number of users who don’t love them as products themselves and have the desire for an alternative. Google Plus is really the first serious alternative to launch.
  • Google “Install” Base - So many people already have Google accounts and use Gmail, that it made it super easy to explose Google Plus to users as well as make it easy to intelligently recommend Gmail contacts to invite.

Will Google Plus Keep Growing?

Google Plus was reviewed well by the tech media, and it feels pretty good as a product. However, after a few weeks now I’ve got over a 100 people in my “circles” but the only activity I’m seeing is from about 5-10 people who all have jobs as part of the tech media.

There is literally NO activity from most of my normal friends, many of whom are on the cutting edge of technology and are heavy social network users.

Why is this? I’ve asked a few of them, and the answers tend to be that they don’t know why they should use Google Plus instead of Facebook or Twitter. Their friends aren’t fully there yet, they don’t really feel the need to organize them into circles, and Facebook and Twitter just do a good enough job.

Google’s going to need to do something to differentiate Google Plus even more from those competitors and do something SIGNIFICANTLY better than the competition in order to get people to spend more time there.

It’s definitely possible, but it’s a tough task that won’t be as easy as the initial spike of growth in the graph above.

Google’s Computerized Car Debate

By some futurist predictions from the past, we’d all be flying around in our cars by 2010. While that’s obviously not the case, Google announced this week that they have developed computerized cars that have logged over 140,000 miles on public roads. While this by itself is pretty cool and amazing, it sparked a bit of debate among tech blogs about how and if Google should be spending time on projects that seem far away from their core mission.
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Google’s New Click to Call Ads Reminds Me Of Onion Video

Google just announced their new Click to Call ads. Which seem to really make me think about this recent hilarious video created by The Onion. The 911 call using the Google phone is fantastic stuff.


New Google Phone Service Whispers Targeted Ads Directly Into Users’ Ears

Did Google Buy AdMob for Ads, Data, or Both?

One of the biggest acquisitions in the advertising and technology space over the past couple of years occurred this week Google recently purchased AdMob for $750 million in stock.

There has been considerable speculation about why Google not only purchased Admob, but spent so much money in doing so. The obvious off the cuff answer is to get their hooks into the mobile display advertising space by acquiring the most well-known mobile ad network. Some people such as Niki Scevak don’t think that’s a particularly good idea, and others such as Silicon Alley Insider seemed to have to work a bit to justify it.
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Google Laying Off Thousands of Temp Workers?

Apparently Google has gotten rid of thousands of temporary workers according to the Associated Press based on documents filed to the SEC. I can’t say this is terribly surprising based on layoffs at my own employer and elsewhere in the tech industry.
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Battle of the Advertising Superpowers: Who’s Got What?

adpowers.jpgIt’s been a crazy couple of months. Not only did my employer agree to be acquired by Yahoo!, but our competitive landscape has changed dramatically with Google acquiring Doubleclick, Microsoft acquiring aQuantive, WPP acquiring 24/7 RealMedia and AOL acquiring AdTech AG to go along with what they already own in Advertising.com.

Additionally, there are still some other large players who are also in the game such as News Corp./Myspace/Strategic Data Corp, and IAC/Ask.com.

Obviously this is a big land grab for these large companies, combined with trying to get innovative companies who are pushing things forward in online advertising. The Wall St. Journal talks about the ad exchange concept and how it relates to these acquisitions.

The media and blogs have been covering these stories quite a bit, but I’ve seen a lot of writers and commenters really not having a great gasp on what pieces of the advertising business each company has now, how they all stack up, and what it all means going forward. So, I’ll try and help out.
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Google and Dell Border on Spyware

As mentioned in my previous post, I just bought a new Dell desktop. One of the things I immediately noticed was the behavior outlined in this blog post about Google and Dell “hijacking” browser address bar type-ins to go to advertising-heavy pages.

Don’t get me wrong, I am an advocate of advertising on the web, but what I didn’t like was that I in the few minutes I spent trying to investigate this on my own machine I didn’t figure out how to turn it off. I primarily use Firefox anyway so I figured I wouldn’t have to deal with it anyway. However, I’ve noticed that even though Firefox thinks it’s my default browser (as I selected it should be) various other applications on my computer keep launching IE7 when they launch web pages.

While I think it’s okay for Google and Dell to work together on providing search results with some advertising, what they’re doing here is pretty offensive with the page above the fold being entirely ads and the difficulty of removing the behavior from your system.

Google Showing Less Ads in Search Results, but Why?

Robert Scoble posted today about his observation about Google putting fewer ads on their search results, and how a Google employee confirmed this and said internal research showed that in the short term this costs them revenue, but in the long term it helps revenue because users trust the ads more and it leads to more clicks and buying behavior.

First, I think we have to ask if we believe this is true. I’d guess that Google would not make such a move without being very confident that it was going to eventually lead to more revenue. As a public company, it’s even risky to hurt short term results in this manner, so I’m betting it doesn’t even hurt their short term revenue results that much.

Scoble then theorizes that the purpose of this is also related to their Pay-Per-Action program:

Anyway, Google is doing that to make way for its new “pay per action” advertising type (announced yesterday). This is brilliant. Advertisers are going to LOVE this. Imagine I ran a print shop, like PrintingForLess. Now I could tie my advertising onto actually getting a sale, or getting a good lead. You see why Google needed more relevant advertising before turning this on. They want only potential buyers to see an ad. Anything else is noise. Noise reduces buying behavior.

Well, something doesn’t jive here because according to Google the Pay-Per-Action ads are only going to appear on their Adsense content network:

Pay-per-action ads are eligible to appear on publisher sites in the Google content network, and publishers can choose specific pay-per-action ads that are relevant to their site to run in new ad units that they create.

So, for at least right now, Google is not putting PPA ads in their search results, which is the area that Scoble is talking about. So either Scoble is incorrect in his theory, or his Google contact gave him information that points to it being likely that PPA ads will be showing up on Google search results soon.